In terms of tariffs, the EU is preparing to pull out of its quiver, in the event that he carries out his threat to impose on February 1, tariffs on six member states, as well as Britain and Norway, because they sent troops as part of a planned military exercise in , which the American president wants at all costs to occupy.
The list was drawn up last year but was delayed until February 7 after the two sides signed a truce in the trade war. The tariffs will apply automatically from that date, unless a majority of member states vote to postpone them again, the FT writes.
What do EU tariffs include?
Under the deal signed between Trump and European Commission President Ursula von der Leyen in Scotland last year, the EU accepted 15% tariffs on most of its exports to the US and postponed its own €93bn worth of retaliatory tariffs.
EU steel and aluminum exporters still pay 50% tariffs and the EU has agreed to remove tariffs on industrial and some agricultural products.
However, the suspended tariffs are back in the spotlight after Trump’s threats. The European Parliament has announced that it will not approve the extension of the suspension of tariffs until the issue is resolved.
Boeing will be the biggest casualty of a new trade war. The EU package includes 25% tariffs on US aircraft, and the US company accounts for the bulk of US aircraft imports, amounting to 11 billion euros, in 2024.
Cars, whiskey and soya are other high-priced goods on the list of reprisals cited by the FT.
The catalog also includes iconic American products such as Harley-Davidson motorcycles, Levi’s jeans and Lucky Strike cigarettes.
Machinery, medical devices, chemical and plastic products, and electrical equipment will also be affected.
Why these products
The selection of products is targeted. Be such that they can be easily replaced by other partners and avoid consumer dissatisfaction. For example, whiskey consumers may turn to Scotch or Irish brands.
“The key criterion for drawing up a retaliatory list is to choose products for which the EU is not dependent on the US, so as to minimize the economic damage to the EU,” said Ignatio García Bercero, a former senior EU trade official.
“A secondary criterion is the selection of products that can have a direct political impact in the US. Since the list of €93 billion is very broad, I think the main criterion would be to minimize the negative impact on the EU.”
The Commission must secure the support of member states to adopt the tariffs, with some capitals insisting on removing some products from the list, fearing reprisals against their own exports, such as spirits and wine. Already, more than €20 billion worth of products have been removed from the original retaliation list.
The “Commercial Bazooka”
The anti-coercion instrument (ACI), which was introduced in 2023 but has never been used, could limit access to the internal market for major US tech companies and others and has been dubbed the Union’s “trade bazooka” as it is seen as the most powerful tool in the EU’s armoury.
It could revoke intellectual property rights, impose tariffs on Netflix or Hollywood movies, prevent American companies from bidding for public contracts, and even close financial markets to American banks.
France is pushing to activate ACI, but other governments are wary, as such measures could harm the EU economy and its consumers, and there are few alternatives to, for example, US venture capital or cloud computing companies.
Moreover, it cannot be implemented immediately, as under European law the Commission must investigate allegations of coercion, negotiate with the US and then get the approval of a weighted majority of member states to agree to take action, a process that takes at least weeks.
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